Financial, Business, Personal Finance News

Besson rejects the hypothesis of nationalization of banks

The French Minister of Industry, Eric Besson, ruled Monday "totally premature" to discuss the hypothesis of a partial nationalization of French banks to prevent serious impacts of the debt crisis.

The major French banks have suffered heavily traded in recent weeks of market turbulence, to the point that some observers do not exclude more than they must use the financial support of the state to strengthen their capital base.

"It seems premature and totally beside the point now to raise this event," said Eric Besson on RMC and BFM TV.

Societe Generale announced earlier today a new savings plan, while the rating agency Moody's might, according to several sources, the note will soon deteriorate and those of BNP Paribas and Credit Agricole.

How to reduce unemployment without growth

For the French economy creates jobs, it must grow by at least 2%. Unattainable at present. However, there are solutions to reduce unemployment. Here's why. Agency employment center in Nice

After four months of slight decline earlier this year, unemployment in France has increased considerably and the. In July, the number of unemployed rose by 36,100. It is the largest monthly increase since October 2009. It is particularly disturbing that this is the third consecutive month of increases. "Predictably, with growth at 0%," Xavier Bertrand has responded in an interview with Le Figaro on Friday. "But that does not detract from my belief that unemployment will go back down," he added.

It appears optimistic, our Minister of Labour. As rising unemployment reflects a depressed economic conditions.As recalled by Xavier Bertrand growth lights made the place the second quarter. And the second half does not look better, the two engines of growth – business investment and household consumption – being seized. The government also revised down its growth forecasts for 2011 and 2012 – to 1.75% against 2.25% and 2 before. Some analysts are even more pessimistic: they expect a growth of only 1.5% this year and 1% next year.

Or to create jobs, the French economy should grow by at least 1.5%. And to reduce unemployment is to say, create enough jobs to absorb the growth of the labor force, growth must be at least 1.8%. And that's in normal times. The problem is that the French economy out of two years of zero productivity and a year of recession – in 2009.The catch must be more important. To reduce unemployment, it would now grow by at least 2.3% per year. We are far. "In order to reduce unemployment without growth, there are only two treatments, said Eric Heyer, deputy director of analysis and forecasting department of the French Office of Economic conjectures (OFCE).

Administrative treatment of unemployment

France has the chance – or luck – to have a dynamic workforce, due to a high birth rate (more than two children per woman). According to INSEE, the labor force, which stood at 28.35 million people in 2010, is expected to grow by an average of 110,000 people a year by 2025. More than 9000 people a month who register for employment center. To reduce the workforce, just out lists of people registered as unemployed.How? "In the radiant, by offering internships, apprenticeships and training, or putting them into early retirement and by providing job search," Eric Heyer lists.

Radiation administrative job seekers jumped unusual in July (25.1% over the month and 7% year on year). The SNU FSU, the majority union at employment center, sees the consequence of the recent computerization of letters sent to the unemployed. Some economists also point out that past governments in pre-election period, have used an administrative treatment of unemployment.

The current government is not immune to this temptation. Last February, Nicolas Sarkozy announced the release of 500 million euros to encourage the use of long-term unemployed and young people. On the menu: skills training and learning.Or people in learning or training out of lists of employment center. However, the government has no intention of using the subterfuge of early retirement, on the contrary, the exemption from job search (DRE), which allows the unemployed aged 60 and over not to look employment and reach retirement, will be removed in 2012. As for the pension reform passed in 2010, it extends the legal age of retirement and the age of full retirement. Which penalizes the elderly first. Since January 2008, unemployment of over 50 jumped 57%.

Social treatment of unemployment

"The alternative to reduce unemployment when growth is not the appointment is that the public sector taking the baton in the market sector," said Eric Heyer. This includes all forms of assisted contracts, that is to say, employment contracts mainly funded by the state.This is called the social treatment of unemployment. It is a great classic from the left. Martine Aubry, the Socialist candidate in the primary, has already announced that its first action as president, if elected in 2012, will be to remove the tax exemption of overtime to fund the creation of 300,000 "jobs of the future "- the little brothers of youth employment in 1997.

But this solution is also widely used on the right. The government is not talking about jobs for young people but CAE (support contracts in employment in the public sector) and ICE (employment initiative contracts in the private sector). 440 000 of these subsidized contracts to be financed by the state this year.

"While it is not sustainable contracts is not a panacea, recognizes Eric Heyer.But these subsidized contracts have two advantages: one is to target audiences that have the most difficulty in finding employment [the young and long-term unemployed for example], the second is to provide purchasing power to more, which is likely to boost consumption so the country's economic machine. "

Morgan Stanley reduced its forecast for global growth

Morgan Stanley lowered its growth forecasts for the global economy for the years 2011 and 2012, the revision is stronger for developed countries.

In a note published Thursday, the U.S. investment bank now expects growth in global gross domestic product (GDP) of 3.9% in 2011, against 4.2% previously and 3.8% in 2012, instead 4.5%.

The GDP of developed countries is expected to grow by an average of 1.5% in 2011 and 2012 (against 1.9% and 2.4% forecast earlier), according to economists at Morgan Stanley who make a downward revision larger scale for European growth in 2012.

"We're lowering our forecast for GDP even in the euro area, and this time a full percentage point over the period 2011-2012 and we now expect GDP growth of 0.5% on average (significantly below our previous forecast of 1.2%), "they say, adding that the consensus expects a 1.5% growth in 2012.

Economists at Morgan Stanley state that they bring back their 2011 growth forecast for the eurozone to 1.7% against 2.0% previously.

These revisions, they say, stem from mistakes made in recent economic policy of the United States and Europe, as well as the prospect of harsher austerity measures in 2012.

For emerging markets, they see a slowdown in growth of 7.8% in 2010 to 6.4% in 2011 (against 6.6% expected earlier).For 2012, they lower their forecasts for the emerging 6.1% (against + 6.7%).

If they feel that developed countries are flirting with recession (understood as two consecutive quarterly contractions in GDP), they dismiss the scenario of a return to recession.

"In this context, we expect more rate hikes from the ECB but a rate cut next year – we are lowering our forecast on the refi rate (the ECB's main rate, Ed) to 1% by end 2012 against 2% previously, "wrote economists at Morgan Stanley.

After two increases this year, the ECB refi rate is currently 1.5%.

"As anxiety on growth gains, we expect that the 10-year Bund yield fell 2%," they add, by advocating caution on equities and underweight cyclicals.

U.S. consumer confidence to a low of 30 in August

U.S. consumer sentiment fell in August to its lowest level in more than 30 years, amid fears for economic recovery and disillusionment over government policies.

Preliminary estimates of the survey Thomson Reuters / University of Michigan released Friday, the index fell to 54.9, the highest since May 1980, after 63.7 in July. Analysts on average expected 63.0.

After this publication, the major indices on Wall Street erased some of their gains and the Nasdaq fell even in the red, before resuming their advance.In Paris the CAC 40 also briefly reduced his earnings.

The high unemployment, stagnant wages and the interminable debate between Democrats and Republicans over raising the debt ceiling weighed on consumer sentiment, who were interviewed before the downgrade of sovereign states United by Standard & Poor's.

"In the history of this survey, we have never had so many consumers who spontaneously mentioned the negative role of government," said in a statement the director Richard Curtin of the investigation.

"It's more than just the recognition that traditional monetary and fiscal measures are exhausted in large part, it is the realization that the government was unable or unwilling to act to do so."

Bitterness and CONCERNS

The Obama administration is reaping the negative opinions of 61% of respondents, the worst score among all the previous presidents.Two thirds of respondents felt that the economy had deteriorated recently.

And 75% are expected in early August in difficult times for the economy, a ratio approaching the historic peak of pessimism hit 82% in 1980.

The component of current conditions index fell more sharply than expected to 69.3, its lowest level since November 2009, after 75.8 in July and while the market awaited 74.3.

The expectations fell to 45.7, also unheard of since May 1980 against 56.0 in July to 55.3 and consensus.

Inflation expectations one year were flat in August to 3.4% last month compared with July, as well as expectations to five years, to 2.9%.

"The surprise is the sharp decline" of consumer sentiment, said Stephen Stanley, Pierpont Securities.

"Some numbers are even lower than what was seen during the recession and financial crisis. The fall in expectations appears to be due to the bitterness of the people on the political situation and their concerns about the financial markets. "

However, this study concern was partly minimized markets after the release of a 0.5% increase in retail sales in July in the United States, or their biggest increase since March.

"The expenses of people do not always match their mood. I doubt that things are as bad as what is suggested by the index of consumer sentiment," said Stephen Stanley.

All you need to know about the crisis in the euro area

Why do countries in the euro area they not borrow directly from the ECB? Who pays to save Greece, Ireland, etc..? Which European countries are likely to see their score worse? The responses of the writing of L'Expansion. Com. The logo of the euro to the European Central Bank in Frankfurt.

We asked you to ask us any questions you may have about the debt crisis. Here are those for the euro area and the public debt in general and our responses.

Why European states can not they borrow from the ECB, rather than through private banks?

Historically, central banks have indeed been created to fund the States. But now, states are required to obtain financing from capital markets. It is officially recorded in France since 1973 and is primarily in the Treaty of Maastricht.This rule is justified by the idea, questionable, that would reach more markets to discipline the poor performers: if a state is too extravagant or too much debt, the markets by requiring the sanction of the highest interest rates. And Germany is the assurance that states will not abuse the printing press which could lead to hyperinflation.

Which countries of the European Union who are under the risk of their score to deteriorate?

Greece, first. The country is already one or two notches of default. The rating agencies have already announced that the Greek note will rise to D (default) upon entry into force of the new rescue plan, which provides for an exchange of maturity and interest rate debt of the country, either losses for investors. Spain and Italy next.Both countries are under pressure from financial markets for several weeks, they feared a contagion of debt. Weaknesses: low growth prospects, a fragile banking system and a high unemployment rate for Spain, a high level of debt and a structural lack of competitiveness in Italy. Spain has already seen its rating (AA) degraded twice since 2009. Rating of Italy (AA2) is itself placed on negative watch by Moody's since June. The United Kingdom then and maybe even France. The austerity policy implemented by the country London is currently protected from cyclones in the financial markets. But the negative impact of the austerity of the British growth worries. As for France, S & P said that his "AAA" was stable. The agency has even praised Paris for its fiscal policy.This does not preclude some analysts to express concern. Because France has the worst fiscal ratios of the European Group of triple A.

ECB eases Italy and Spain by buying their bonds. But with what money? Who pays?

Nobody pays. As the central bank creates money in the refinancing of commercial banks, it is also to buy the debt of distressed states. If one country fails, it passes in provisions for losses on its balance sheet. Except that the ECB reluctant to pursue such purchases, pushing the European financial stability to take over, as provided by the latest aid package to Greece. To do this, the EFSF will issue bonds on financial markets.If Greece fails on these loans, the countries involved in the EFSF will repay creditors and there will be much the taxpayers who pick up the bill.

And if the debt was owned not by markets but by citizens, such as in Japan?

This is one of the solutions proposed to reduce dependence on markets and to guard against the loss of confidence that may arise, for example, a deterioration in the sovereign rating of the country. On the left, is defended by such Montebourg Arnaud and Jean-Pierre Chevenement. Japan's debt, which exceeds 200% of GDP, is considered more stable because it is owned approximately 95% by domestic investors. The postal bank converts debt including the vast majority of deposits. Some believe that 17% of the French savings rate, one of the highest in the EU, would make this system possible.Strong supporter of the re-nationalization of the debt, the journalist Jean-Michel Quatrepoint Tribune suggests the issue of treasury bills perpetual, paid around 4.5%, part of which would be recovered by the levies and the remainder reinvested in the economy. Economist Jean-Pierre Petit, interviewed by Expansion. Com, think instead that "saving the French would not have sufficient absorption capacity": the end of 2010, 1149 billion were placed on life insurance and 199 billion of the savings books, when the government debt exceeds 1.6 trillion. "It would not change the nature of the problem, said he, too, since these borrowers French-insurance companies, institutional investors, etc .- have the same fear of repayment capacity that international investors."

European shares continue to dive at the opening

The major European stock markets fell heavily again on Friday the opening of markets on a background of prospects for a relapse of the global economy and contagion of debt to Spain and Italy.

At 9:30, the CAC 40 gave 1.96% to 3255.42 points after opening down 3.05% to 3219.09 points.

The London Stock Exchange was down 2.72% and 2.91% in Frankfurt.

The Tokyo Stock Exchange gained 1.22% at closing

The Tokyo Stock Exchange ended up 1.22% on Friday, supported by its financials in the wake of satisfactory results delivered Thursday by Morgan Stanley while exports have benefited from the strengthening of the euro against the yen.

The Nikkei gained 121.72 points to 10,132.11 and the Topix, broader, took 1.01% to 868.81.

Analysts said the path to be taken by Japanese values ​​in the near future will largely depend on the evolution of the dollar / yen, but also the developments of the situation on the front of the European debt.

For now, the financial markets have focused on after Morgan Stanley has reassured investors by reporting a quarterly loss less than expected.

The Japanese banking stocks index closed up 2.33%, signing a fourth consecutive session progress.

Mitsubishi UFJ Financial Group, the first Japanese bank by assets and shareholder of Morgan Stanley in 22%, took 3.3%, while Sumitomo Mitsui gained 3.6%.

Exports in turn benefited from the strengthening of the euro, which climbed to a high of two weeks on the platform EBS, after leaders of the eurozone announced Thursday night to have reached an agreement aimed at alleviating Greece.

Canon has gained 1.39% and Sony Corp. was awarded 1.11%.

European shares end up, the ACC is 1.61%

European shares finished the session again on the rise, driven by quarterly results and the hope of encouraging a settlement of debt problems in the U.S. and Europe on the eve of a crucial summit of leaders of the euro area.

The CAC 40 index gained 1.6% or 59.65 points to 3754.60 points.

Other major European markets also finished up: London and Frankfurt gained 1.10% 0.40%. Of the European indices, the Eurofirst 300 took 1.32%.

The banks have benefited from news that the European Financial Stability Fund (EFSF) could be used to redeem bonds on the secondary market. Societe Generale gained 5.14%, to 36 euros.Dexia jumped nearly 9% to 1.8910 euros and Commerzbank of 6.31% to 2.51 euros.

Stoxx index of European banking was up 3.69%, its highest gain since Jan. 12.

An authorized source in the euro area reported that the euro area was discussing the possibility of allowing the fund to rescue the euro zone to extend credit lines to countries and to redeem bonds on secondary markets.

RWE sells its high-voltage network German

RWE, the fifth European group of utilities, said Thursday that he yielded to a consortium of financial investors 74.9% of high-voltage network Amprion Germany.

He added that the transaction, valued on the basis of an enterprise value of around 1.3 billion euros, will probably close in the third quarter.

A consortium of insurers take over the network, which comprises some 11,000 km of power lines.

A source familiar with the matter told Reuters on Wednesday that the German group could seal a deal this week on this assignment.

RWE is the third largest German utilities to divest its distribution, regulation by making returns less attractive.

Gas prices and electricity low, combined with the tax on nuclear fuel, RWE led to anticipate a decline in profits for three years.

Chief Executive Juergen Grossmann has embarked on a process of selling eight billion euros of assets, but according to sources familiar with the matter, he also considered the possibility of merger with Iberdrola.

The consortium will take control of the network consists of Munich Re, Swiss Life, Talanx

and a pension fund of German doctors.

Sources familiar with the matter told Reuters that RWE would retain operational control of the network even though it sold a majority stake

The Bundestag, the lower house of German parliament voted in June for a release of Germany's nuclear power by 2022, as a result of the nuclear disaster at Fukushima in Japan.

The action RWE gained 0.11% to a quarter of an hour of closing.

The Bank of France lowered its growth forecast

The forecast was lowered to 0.2% for the second quarter, against 0.9% in the first three months of the year.

The growth of the French economy to slow to 0.2% in the second quarter, after starting the year at 0.9%, according to a third prediction of Banque de France (BDF) and published on Friday revised down by from its last estimate, which stood at 0.4%.

This prediction is consistent with the National Institute of Statistics (INSEE), which will publish its growth figures for the second quarter in August.

The net downward adjustment of French growth forecast due to the stronger than expected decline in its business climate indicator, which falls below its long-term in the industry, it passes 99 points (against 103 in May) and in the service he moved to 99 points (against 100).

For the full year, the government expects growth of 2%, after 1.4% in 2010.